The low-cost netPCs of Chennai-based Novatium Solutions Pvt Ltd will find its way into the developed markets. Thin Client, which operates on a centrally located server where the customer will have to invest only in the monitor and the keyboard, will now be rebranded and sold by Ericsson in the USA and Europe.

Global telecommunications major Ericsson had recently acquired a strategic minority stake in Novatium. “Most of the front-running is by Ericsson and the company will be selling netPCs under the Ericsson brand name in the developed markets,” said Alok Singh, CEO & MD of Novatium.

Novatium has already sold 50,000 units of the Thin Client netPC range in India and abroad, and expects this to grow 5x by next year to reach 2,50,000 units, with the help of Ericsson.

NetPCs are currently sold in China, India, South Africa, Brazil and in the Mauritius, with the Mauritius Telecom. According to Novatium, of the 50,000 netPCs sold so far, around 4,000 have been sold in Mauritius alone. The company claims that the netPC has also seen significant traction from developed markets like the USA and Europe. The product has been launched in Barcelona recently.

Global pricing for the Novatium service has been fixed at $45 per month, which is double the domestic pricing. In India, the company offers it for Rs 400 per month including the broadband or Rs 1,500 per annum without the broadband.

The company has recently launched a new version of its netPC with an international look and feel. The user interface has undergone a redesign by a European consultant hired by Ericsson. The new UI uses widgets, as opposed to icons, and features an upgraded browser – the Firefox 4.

Two board members from Ericsson – Gowton Achaibar, president of Ericsson India Pvt Ltd. and Hkan sterberg, vice-president, New Business Development & Innovation Group Function Strategy, Ericsson – have joined Novatium’s board which has Ray Stata, chairman of Analog Devices Inc., Rajesh Jain, MD of Netcore Solutions and Dr Ashok Jhunjhunwala, founder of the TeNet Group that incubated Novatium, as well as Krishna Kolluri, General Partner of New Enterprise Associates and Ben Mathias, vice-president of New Enterprise Associates (India) Pvt Ltd.

Among its products, the netPC series currently constitutes 80 per cent of all sales for the company. the netbook product, and , focused on SMEs, have been marketed recently while, a USB-bootable pen drive for accessing its Nova Computing Service (which is also targeted at SMEs), contribute to the rest 20 per cent of the sales.

CNERGY is aimed at SMEs who buy netPCs in bulk and want to ensure consistent services and software across all the netPCs. It is not sold to consumers.

Novatium was founded in 2004 and the netPC was launched in 2006. However the company states that the commercial sales have only started during the past one year. Asked about the delay, Singh said, “Till last year, we were conducting extensive pilots in partnership with Indian telcos. Operators wanted to test out the service and wanted to be sure of its value proposition.”

So far, the company has partnered with four operators in India – Airtel, BSNL, MTNL and Tata Communications. It is now in discussions with Reliance Communications.

Although the education segment seems an obvious choice as a target market for netPCs, the company shied away from the opportunity so far. It is only now that they are in talks with aggregators and telecom operators to reach out to educational institutions.

However, instead of ramping up its sales team, it will ride piggyback on the existing distribution networks owned by telcos. “Operators bring feet on the street. Their offerings also compliment what we have; so the tie-ups are essential,” he said.

Operators share the revenue with Novatium, although at the consumer’s end, there is a single bill that charges him for broadband and the netPC service on a monthly basis.

Adoption of 3G will benefit the company in the near future, Singh said. He expects that the sale of the new netPCs, which support 3G as opposed to the old version that required wired lines, will help it in the next six months.

Broadband Issues

Issues faced by netPC consumers are primarily related to broadband outage. Broadband churn itself is at 20 per cent, he said. This means that 20 out of 100 users leave their broadband service provider because of network or service issues. Since netPCs are bundled with these broadband packages, the company is also affected. Novatium is currently experiencing a consequential churn of less than 3 per cent due to broadband-related issues.

“We can’t do much when it comes to the broadband service being offered,” explained Singh.

A trend the company has noted is the drop in interest for productivity-related apps. According to Singh, use of productivity apps has fallen from 3 per cent to 2 per cent of all apps being used by a typical netPc user.

The company is now planning to port its new OS to tablets as well.

Novatium might be competing with new managed-services firms such as eTechies and iYogi, which offer remote online support and automatic upgrades for a monthly subscription fee.

“Contrary to opinions, netPCs are not about affordability but about convenience. Our customers are looking to escape the cycle of updating and upgrading various software applications and operating systems. We welcome the competition,” he said.

Another company offering Thin Clients is the New Delhi-based Nivio, which is priced at Rs 220 per month for students and Rs 470 for businesses. It includes a desktop, storage and Open Office.

In 2007, Novatium raised funding from New Enterprise Associates, a US-based venture capital fund, which was used for expansion within India. Now, it has a presence in 100 cities. Another recent development at Novatium was the shift in its headquarters from Chennai to New Delhi, to better synchronise with the telecom operators and control pan-India sales.